Danny Meyer on reviving restaurants after the pandemic shutdown

Executive overview

The pandemic wiped out nearly all of Union Square Hospitality Group's 2,200 staff, leaving Danny Meyer with 75 people and no revenue. Full-service restaurants cannot be profitable below 80% capacity, and the pre-existing structural weaknesses — rent, tipping, career paths, payroll taxes — make recovery far harder than reopening alone.

Meyer's response is a phased, business-by-business entrepreneurial strategy: start with formats suited to takeout, prove safety protocols, build brand confidence, and add new revenue streams (delivery, wine sales, national shipping) that may outlast the crisis.

The restaurant industry's survival depends on fixing structural problems that existed long before COVID — rent, compensation, and career pipelines — not just reopening dining rooms.

The three phases of recovery

• Meyer frames the journey as reaction → recovery → thrive, and believes getting recovery right is the prerequisite for everything else
• Early weeks were pure reaction: no revenue, no timeline, complete dismantling of 35 years of team-building
• The death of chef Floyd Cardoz caused USHG to stop all activity completely before restarting cautiously
• Recovery mode started with one venue, Daily Provisions, chosen because it suits takeout and requires no reservations or full dining room
• Each restaurant has its own entrepreneurial strategy — there is no single group-wide playbook
• Teams from different restaurants cross-support each other; Union Square Cafe staff helped reopen Daily Provisions

Restaurant-by-restaurant reopening logic

• Venues suited to pickup (Daily Provisions, Blue Smoke barbecue, Marta pizza) activate first
• Museum restaurants (Whitney, MoMA) and airport/ballpark locations cannot open until host venues do
• The rooftop restaurant on the 60th floor is designated as a frontline worker feeding kitchen — food travels down by elevator rather than serving guests
• Union Square Cafe is opening as a bottle shop, selling wine off-premise before reactivating its kitchen, enabled by new state legislation
• National shipping via Goldbelly lets USHG generate revenue from signature dishes without any in-person dining

The economic constraint

• Profitability requires at least 80% of normal capacity; a 50% social-distancing cap makes the standard model unworkable
• Full-service restaurants rely heavily on beverage sales and private events — both are gone or severely restricted
• Each new revenue stream (takeout, delivery, shipping) must either be cashflow positive or provide clear brand value to justify the cost
• Brand visibility matters: "being the first to close is one thing, but I don't want to be the last to open"
• Every day of losses risks further layoffs — the economic, emotional, and safety considerations are inseparable

Structural problems the crisis exposed

• The industry is described as "a COVID patient in their 90s with pre-existing conditions" — nearly anything could have brought it down
• Career pathways are broken: restaurants excel at providing first jobs but fail to build long-term livelihoods for most workers
• The tipping system and payroll tax structure actively disincentivise rehiring
• Liquor laws restrict revenue options that could help restaurants survive at reduced capacity
• The rent model was built for high-density, high-volume city economics that no longer apply in the near term

Renegotiating rent

• Fixed rent based on pre-pandemic density assumptions is fatal at reduced capacity
• Meyer's framing: landlords did nothing wrong, restaurateurs did nothing wrong — dialogue is the only path
• The proposed model is a shift from fixed rent to percentage rent, letting landlords benefit when revenue returns without killing restaurants during the downturn
• This creates a genuine partnership rather than a creditor-debtor relationship

Safety, confidence, and the path back to hospitality

• Three parallel dimensions must align before full reopening: safety protocols, economic viability, and staff and guest confidence
• Ideas under evaluation include staff testing programmes and a health passport analogous to post-9/11 airport security
• The hospitality experience is the last thing to return — masked servers, no tactile service, temperature checks at the door fundamentally alter the experience
• Data is the missing input: decisions are being made on instinct rather than evidence, which slows confidence-building
• Watching sports leagues return — even without crowds — provides incremental normalcy that helps restore consumer confidence

Policy engagement and industry coordination

• Meyer sits on Governor Cuomo's economic recovery council and co-chairs New York City's Hospitality and Tourism Recovery Coalition
• His primary role is as a "railroad station" — channelling ideas from operators, landlords, and institutions to policy makers
• PPP design flaws he highlights: businesses that didn't need loans received them first; the 8-week forgiveness window is too short; the requirement to rehire 75% of staff by June is impossible for NYC restaurants
• Shake Shack returned its PPP loan as the first public company to do so, triggering over $2 billion in returns from other companies and institutions
• His ask: extend the forgiveness period and restructure terms so loans don't become a debt death knell for struggling operators

Supporting laid-off staff

• USHG's HUGS fund (a 501c3) was activated immediately after the layoffs; Meyer donated his full compensation as seed funding
• Gift card sales, chef auctions, and a wine auction raised close to $1.4 million; approximately $1.2 million has already been distributed
• The application process is deliberately simple — no red tape; grants cover rent, groceries, and household needs
• Weekly Zoom calls are open to all laid-off staff to maintain connection and morale
• Roughly 30 partner companies actively hiring are listed on USHG's employee resource page
• Unlike a sports team, USHG will need to re-recruit its dispersed workforce rather than activate contracts